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Accounting Policies of Nagpur Power & Industries Ltd. Company

Mar 31, 2014

1.1 Basis for preparation of Financial Statements:

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the accounting principles generally accepted in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

1.2 Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimate are recognized in the period in which the results are known /materialized.

1.3 Fixed Assets and Depreciation:

Fixed assets are stated at Cost less impairment losses, accumulated depreciation except freehold land, which is stated at cost. Consequent to the recognition of impairment loss depreciation for the year on assets impaired has been provided on the basis of revised balance useful life of those assets and on the straight-line method at the rates and manner prescribed in Schedule XIV to the Companies Act, 1956 on all other assets except office equipments. Depreciation on office equipment is provided at 6.33% on Straight Line Method.

1.4 Investments:

Investments are classified into non current investments and current investments. Non current investments are stated at cost. Current investments are stated at lower of cost or market value. When disposing of a part of the holding of an individual investment, the carrying amount of cost allocated to the part that is disposed is determined on the basis of the average carrying amount of the total holding of the investment.

1.5 Inventories:

Inventories of raw materials are stated at lower of cost or net realizable value. Work in process is stated at cost. Stores, spares & tools are stated at cost except the obsolete/non usable stores, which are written off for obsolescence. Finished goods and by-products/waste products where cost is ascertainable are stated at lower of cost or net realisable value and by-products / waste products where cost cannot be determined are stated at net realisable value. The reusable waste, which is not ascertainable, is not accounted.

1.6 Sundry Debtors and Loans and Advances:

Sundry Debtors and Loans and Advances are stated after making adequate provisions for doubtful balances.

Notes on Financial Statements for the Year ended 31st March, 2014

1.7 Revenue Recognition:

Revenue is recognised when no significant uncertainty as to determination or realisation exists.

1.8 Retirement and other employee benefits:

i) The Company contributes towards Provident Fund & Family Pension Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the statute/ rules.

ii) The Company contributes to defined benefit schemes for Gratuity which is administered through duly constituted and approved independent trust. The liability for Gratuity and leave encashment is determined on the basis of actuarial valuations made at the year end.

1.9 Foreign Exchange Transactions:

Transactions denominated in foreign currency are accounted at the exchange rates prevailing on the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the Profit and Loss Account. Exchange differences relating to fixed assets are adjusted in the cost of the asset. Premium in respect of forward contracts is accounted over the period of the contract.

1.10 Taxation:

Income tax expense comprises of current tax, deferred tax charge or credit and fringe benefit tax. The deferred tax charge or credit is recognised using current tax rates. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed as at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation/liabilities.

1.11 Contingent Liability:

Contingent liabilities are usually not provided for unless it is probable that the future out come may be materially detrimental to the Company.


Mar 31, 2012

1.1 Basis for preparation of Financial Statements:

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the accounting principles generally accepted in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

1.2 Use of Estimates

The preparation of financial statemepts requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimate are recognised in the period in which the results are known/materialized.

1.3 Fixed Assets and Depreciation:

Fixed assets are stated at Cost less impairment losses, accumulated depreciation except freehold land, which is stated at cost. Consequent to the recognition of impairment loss depreciation for the year on assets impaired has been provided on the basis of revised balance useful life of those assets and on the straight-line method. Depreciation is provided on Straight Line Method and at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on all other assets except office equipments, furnaces and pollution control equipment. The depreciation on furnaces and pollution control equipments has been provided on Written Down Value Method and at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 and the office equipments are depreciated at 6.33% on Straight Line Method

1.4 Investments:

Investments are classified into non current investments and current investments. Non current investments are stated at cost. Current investments are stated at lower of cost or market values on overall basis. When disposing of a part of the holding of an individual investment, the carrying amount of cost allocated to the part that is disposed is determined on the basis of the average carrying amount of the total holding of the investment.

1.5 Inventories:

Inventories of raw materials are stated at lower of cost or net realizable value. Work in process is stated at cost. Stores, spares & tools are stated at cost except the obsolete/non usable stores, which are written off for obsolescence. Finished goods and by-products/waste products are stated at lower of cost or net realisable value and by-products / waste products where cost cannot be determined are stated at net realisable value. The reusable waste, which is not ascertainable, is not accounted.

1.6 Sundry Debtors and Loans and Advances:

Sundry Debtors and Loans and Advances are stated after making adequate provisions for doubtful balances.

1.7 Revenue Recognition:

Revenue is recognised when no significant uncertainty as to determination or realisation exists.

1.8 Retirement and other employee benefit:

i) The Company contributes towards Provident Fund & Family Pension Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the statute/ rules.

ii) The Company contributes to defined benefit schemes for Gratuity. Which is administered through duly constituted and approved independent trust. The liability for Gratuity and leave encashment is determined on the basis of actuarial valuations made at the year end.

1.9 Foreign Exchange Transactions:

Transactions denominated in foreign currency are accounted at the exchange rates prevailing on the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the Profit and Loss Account. Exchange differences relating to fixed assets are adjusted in the cost of the asset. Premium in respect of forward contracts is accounted over the period of the contract.

1.10 Taxation:

Income tax expense comprises of current tax, deferred tax charge or credit and fringe benefit tax. The deferred tax charge or credit is recognised using current tax rates. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/ liabilities are reviewed as at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation/liabilities.

1.11 Contingent Liability:

Contingent liabilities are usually not provided for unless it is probable that the future out come may be materially detrimental to the Company.


Mar 31, 2010

I) Major Accounting Policies:

a) Basis for preparation of Financial Statements:

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the accounting principles generally accepted in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

b) Fixed Assets and Depreciation:

Fixed assets are stated at Cost less impairment losses, accumulated depreciation except freehold land, which is stated at cost. Consequent to the recognition of impairment loss depreciation for the year on assets impaired has been provided on the basis of revised balance useful life of those assets and on the straight-line method. Depreciation is provided on Straight Line Method and at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on all other assets except office equipments, furnaces and pollution control equipment. The depreciation on furnaces and pollution control equipments has been provided on Written Down Value Method and at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 and the office equipments are depreciated at 6.33% on Straight Line Method

c) Investments:

Investments are classified into long term and current investments. Long Term investments are stated at cost. Current investments are stated at lower of cost or market values. When disposing of a part of the holding of an individual investment, the carrying amount of cost allocated to the part that is disposed is determined on the basis of the average carrying amount of the total holding of the investment.

d) Inventories:

Inventories of raw materials are stated at lower of cost or net realizable value. Work in process is stated at cost. Stores, spares & tools are stated at cost except the obsolete/non usable stores, which are written off for obsolescence. Finished goods and by-products/waste products are stated at lower of cost or net realisable value and by-products / waste products where cost cannot be determined are stated at net realisable value. The reusable waste, which is not ascertainable, is not accounted (Refer Note ii).

e) Sundry Debtors and Loans and Advances:

Sundry Debtors and Loans and Advances are stated after making adequate provisions for doubtful balances.

f) Revenue Recognition:

Revenue is recognised when no significant uncertainty as to determination or realisation exists.

g) Retirement and other employee benefit:

i) The Company contributes towards Provident Fund & Family Pension Fund which are defined contribution schemes. Liability in respect thereof is determined on the basis of contribution as required under the statute/rules. ii) The Company contributes to defined benefit schemes for Gratuity. The liability for Gratuity and leave encashment is determined on the basis of actuarial valuations made at the year end.

h) Foreign Exchange Transactions:

Transactions denominated in foreign currency are accounted at the exchange rates prevailing at the date of the transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the Profit and Loss Account. Exchange differences relating to fixed assets are adjusted in the cost of the asset. Premium in respect of forward contracts is accounted over the period of the contract

I) Taxation:

Income tax expense comprises of current tax, deferred tax charge or credit and fringe benefit tax. The deferred tax charge or credit is recognised using current tax rates. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed as at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation/liabilities

j) Contingent Liability:

Contingent liabilities are usually not provided for unless it is probable that the future outcome may be materially detrimental to the Company.

ii) Companys Ferro Alloys unit generated waste during the process of manufacture, which has accumulated over the years in and around the main plant. The waste is reusable for extracting metal content therein. Company has set up a Metal Recovery Plant for the purpose. During the year, company has accounted for stock of unextracted metal contents valuing Rs. 22,400,000 (Previous Year Rs. 5,67,60,000/-) out of this accumulated waste based on the valuation report of the Consultant Metallurgist obtained during the year. The technical consultants have advised the Company that the balance of this accumulated waste in terms of its quality, metal content and realizable value cannot be yet reasonably ascertained. Company has therefore not been in a position to account for stock of this balance accumulated waste.

iii) DEFINED BENEFIT PLANS:

As per Actuarial valuation as on 31st March, 2010 and recognised in the financial statements in respect of Employee Benefit schemes:


Mar 31, 2000

The accounts are prepared in accordance with the accounting principles generally accepted in India and are in line with the relevant laws as well as the guidelines prescribed by the Department of Company Affairs, Ministry of Industry and the institute of Chartered Accountants of India.

(a) System of Accounting :

The Company adopts the accrual basis in the preparation of the accounts.

(b) Sales :

Sales comprise the sale of goods and are inclusive of excise duty and export incentives.

(c) Research and Development :

(i) Research and Development cost which comprise of raw materials, captively consumed Silico Manganese and other chargeable expenditure are charged to revenue when incurred. The credits emanating from this activity is reflected under the head sales and closing stocks.

(ii) Expenditure of capital nature is capitalised under appropriate heads and depreciation provided thereon as per the Companys depreciation policy. Interest and other direct expenses are capitalised upto the date of commissioning of the Plant & Machinery.

(d) Relining Expenses :

Furnace Relining expenses are charged as expenses in the year in which relining is carried out.

(e) Retirement Benefits :

Cost of retirement benefits like Provident Fund, Pension and Gratuity are accounted on accrual basis. Provision for gratuity liability to employees is made on the basis of actuarial valuation.

(f) Privilege leave encashment :

Employees are entitled to accumulate their privilege leave within specified limits and can claim encashment thereof while in service or on separation or otherwise. Provision for leave encashment liability is made on the basis of actuarial valuation.

(g) Depreciation :

Depreciation on the fixed assets is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act 1956. On other assets purchased during the period by the company it is provided from the month of acquisition. Leasehold land is amortised over the period of the lease.

(h) Inventories :

Inventories are valued as under :

(i) Finished Products - at lower of cost or net realisable value (Cost includes direct cost and factory overheads in terms of revised Accounting Standard - 2 issued by the Institute of Chartered Accountants of India). It also includes excise duty.

(ii) Raw Materials - at or below cost

(iii) Stores Spares & Tools - at cost

(iv) By-product - at net expected realisable value

(v) Lime Stone (Trading) - at cost

(i) Sundry Debtors :

Debtors are stated after writing off and providing for bad and doubtful debts.

(j) Loans & Advances :

These are also mentioned after providing for doubtful advances.

(k) Foreign Exchange Transactions :

The Purchase and Sales invoices in Foreign Currencies are converted in Indian Rupees at the rates of exchange prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing on the Balance Sheet date and the exchange gain/loss is recognised in the profit and loss account.

ii) The Company has not debited to its power and fuel account full bills raised by the Maharashtra Sate Electricity Board (MSEB) as the management is of the view that the NTPC power allocation was excessively charged. It was wrongly calculated by MSEB on contracted maximum demand instead of on recorded demand.

The Company has not charged to its profit and loss account Rs. 10,66,51,567/- upto 31-3-2000 (including Rs. 8,32,79,437/- upto past period) but has treated the same as an item of contingent liabilities not provided for (item iii of Schedule 19 - Notes to the Accounts).

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